A fixed point approach for the computation of market equilibria

Abstract

In proposing an open problem, Codenotti et al. [3, 5] conjectured that the welfare adjustment scheme can approximate the general market equilibrium by iteratively using an oracle for the Fisher's model. In this work, we analyze the scheme for a large class of market models. We show that the iterative step is in fact a Lipschitz continuous function and the residue approximation of its fixed point is a good approximation of the market equilibrium price. © Springer-Verlag Berlin Heidelberg 2005.